Technical and macroeconomic factors that will shape forex trading at night

Tomorrow, February 6, is a national holiday in New Zealand. This may lead to reduced liquidity in the financial markets, as many institutions and participants will be closed. However, currencies such as the New Zealand Dollar (NZD) may experience fluctuations due to lower activity, which could increase volatility in the short term. Market participants should be alert for larger price movements if unexpected news or events emerge that might affect risk and investor sentiment.

During the night, volatility in the currency markets is expected to rise, with major moves likely driven by technical factors and macroeconomic data. The Bloomberg Dollar Index saw a decline after concerns about a global trade war began to ease, leading to a drop in the dollar against some of the major currencies. This decline may continue during the night if market sentiment remains favorable for risk assets. The upward movement of the yen, supported by data on wage growth in Japan, may continue to apply pressure on USD/JPY.

Key levels to watch in the USD/JPY pair will be around 152.00 and 151.50, with a break below these levels possibly intensifying declines. The market may also react to the failure of the ISM services in the US, continuing to push the dollar lower. A look at possible corrections in the market dynamics of USD/JPY may lead to corrective moves, but the overall direction appears more favorable for the yen.

The upward movement of the Australian Dollar (AUD/USD) and New Zealand Dollar (NZD/USD) may continue, especially if these currencies manage to break through key technical levels. The threshold for AUD/USD appears to be around 0.6287, with a break above these levels potentially opening the way for further gains toward the January highs. These currencies, sensitive to global risks and commodity prices, could perform well if market sentiment remains optimistic.

Regarding the Canadian Dollar, USD/CAD also showed a decline, reaching its lowest level since January. This movement is expected to continue if oil prices maintain stability or rise, as the Canadian currency often moves in sync with commodity prices. Watch for potential technical rebounds around 1.4270, but if the decline continues, the next target will be the level around 1.4000.

In general, overnight, the main focus is expected to be on market reactions to technical levels, with possible subsequent corrections in the direction of the movement, especially for USD/JPY and USD/CAD.